UK's £2.7tn debt is same size as GDP for the first time since 1961

The UK's debt pile has reached the same size as the entire economy for the first time since 1961, according to official figures. 

The ONS measurement of public sector net debt was £2.768trillion at the end of last month, equivalent to 100 per cent of GDP.

The grim mark was hit as Government borrowing rose by more than expected to £13.7billion - £3.3billion higher than last August and the third highest for the month on record.

The numbers will heap pressure on Chancellor Rachel Reeves ahead of a crucial Labour conference, and with the Budget looming on October 30.

Ministers have been accused of talking the economy into a slowdown with threats of tax hikes and gloomy warnings about prospects.  

Borrowing for August was more than the £11.2 billion forecast by Britain's official forecaster, the Office for Budget Responsibility (OBR), and more than the £13 billion economists were pencilling in.

In the financial year so far to August, the government has racked up £64.1billion, £0.3billion more compared to the same five-month period a year earlier.

ONS chief economist Grant Fitzner said: 'Borrowing was up by over £3billion last month on 2023's figure, and was the third highest August borrowing on record.

Chief Secretary to the Treasury Darren Jones said: 'Central government tax receipts grew strongly, but this was outweighed by higher expenditure, largely driven by benefits uprating and higher spending on public services due to increased running costs and pay.

'When we came into office, we inherited an economy that wasn't working for working people. 

'Today's data shows the highest August borrowing on record, outside the pandemic. Debt is 100 per cent of GDP, the highest level since the 1960s. 

'Because of the £22billion black hole in our public finances we have inherited this year alone, we are now taking the tough decisions now to fix the foundations of our economy, so we can rebuild Britain and make every part of the country better off.' 

John O'Connell, chief executive of the TaxPayers' Alliance, said: 'Taxpayers will be hoping that this will be a wake up call for Rachel Reeves ahead of the budget.

'With the debt now matching the size of the economy, this needs to be a watershed moment for all politicians, but particularly the chancellor, to recognise that the situation is unsustainable.

'Getting a grip of the national debt should now be a top priority for the government, with future generations set to be hit hard if it follows the big spending philosophy of its predecessors.'